London’s luxury property has witnessed a £38 billion development boom lately, owing to the increased demand from European and Asian buyers seeking stable investments, while turning away from the troubled eurozone economies.
The number of upmarket housing projects in the pipeline in London has seen an increase of more than two-thirds during the past year, with 15,500 units to be ready for delivery by 2021, even though construction work in other parts of the country remains moribund.
According to EC Harris, the building consultancy, London homes would occupy an area equivalent to the 2.5 square kilometres Olympic Park in Stratford, and would have a market value of £38 billion, on completion.
London’s prime property market continues to beat those in New York, Paris and Hong Kong. Prices of luxury property in London have risen 49% since March 2009, driven almost entirely by foreign buyers, according to estate agents Knight Frank.
Developers, private equity companies and wealthy individuals have been lured by this growth to invest billions into building luxury housing schemes. However, investors are actively converting commercial property into luxury apartment blocks in the smaller markets.
Mark Farmer, head of residential property at EC Harris, said, “London prime residential continues to act as a magnet for global investment, and offers clear opportunities for properly organised and funded developers and investors to generate healthy returns.”
However, Farmer observed that unlike the previous property booms, much of the money coming into the sector was from long-term investors, such as pension funds, seeking a stable return.
“It is one of the most straightforward property markets in the world – if you buy something, you own it and no one can take it away from you”, said Tony Pidgley, chairman of Berkeley Group, London’s largest property developer by volume.